A branch of Citibank in New York, United States, on Friday, January 7, 2022.
Victor J. Blue | Bloomberg | beautiful pictures
Citigroup will sell its consumer banking businesses in Indonesia, Malaysia, Thailand and Vietnam to Singapore United Overseas Bank, the banks announced on Friday.
As part of the deal, UOB said it will acquire Citi’s unsecured and unsecured loan portfolios, wealth management and retail deposit units that make up its consumer banking business. their products in four markets.
UOB, which has a prominent presence in Southeast Asia, will pay Citigroup the net assets of the acquired businesses as well as a premium of $690 million.
Citi’s consumer business has a total net worth of about S$4 billion ($2.97 billion) and a customer base of about 2.4 million as of June 30, 2021, UOB said.
The proposed transaction is expected to be financed through the bank’s excess capital and is estimated to reduce UOB’s tier 1 common equity ratio, which measures a bank’s capital to assets. its value – from 70 basis points to 12.8%, UOB said. It added that the impact on the expected CET1 rate is not material and will remain within regulatory requirements.
The sale of these four consumer markets, along with our previously announced deals, demonstrates our sense of urgency to undertake a refresh of our strategy.
“UOB believes in the long-term potential of Southeast Asia and we have been disciplined, selective and patient in finding the right opportunities for growth,” said Wee Ee Cheong, Vice President and Director executive at UOB, said in a statement.
About 5,000 Citi consumer bankers and support staff in four markets are expected to move to UOB when the proposed deal closes.
The acquired business, together with UOB’s regional consumer franchises, will form a powerful combination that will help expand the UOB Group’s business and enhance its position, said Wee. our position as a leading bank in the region.
UOB stock added 1.23% Friday afternoon, following the announcement.
Citi said it expects the acquisition to free up about $1.2 billion in allocated tangible equity and increase tangible common equity to more than $200 million. Tangible equity is a metric used to assess a financial institution’s ability to cope with possible losses.
The New York-based bank will retain control of its institutional businesses in Indonesia, Malaysia, Thailand and Vietnam.
Citigroup CEO Jane Fraser said last year that the bank will exit retail operations in 13 countries outside the US to improve profits. Many of those markets are in Asia-Pacific, including Australia, China, India and Indonesia.
“The sale of these four consumer markets, along with our previously announced deals, demonstrates the urgency we feel to execute on our renewed strategy,” said Citi Chief Financial Officer Mark Mason. said in a statement on Friday.
Citi expects the transaction to be completed between mid-2022 and early 2024, subject to progress and outcome of regulatory approvals.
Last year, Citi said it had agreed to sell its consumer banking businesses in Philippines and Australia and then reduce consumer banking in Korea.
